Overview
iUSD is a digital token on Cardano that aims to hold a steady value of one US dollar. You can hold it in a normal Cardano wallet, send it, or swap it like any other token. New iUSD is created when someone locks up ADA as backing inside an app called Indigo Protocol, and on-chain rules keep the price close to a dollar without any bank holding cash in reserve1.
Because iUSD is a synthetic stablecoin (a token whose price tracks a real-world asset using on-chain collateral instead of cash in a bank), it sits in the wider family of Cardano stablecoins. Indigo Protocol also issues sibling tokens like iBTC for Bitcoin exposure and iETH for Ethereum exposure1. The protocol itself is run by holders of a separate governance token called INDY through the Indigo DAO, a community group where token holders vote on changes.
Key Features
- No bank or custodian behind it. Every iUSD in circulation is backed by ADA locked in an on-chain vault (a smart contract that holds the backing), and the system makes sure the locked ADA is always worth more than the iUSD it backs2.
- Works in any Cardano wallet. Once minted, iUSD behaves like any other Cardano token. You can send it, receive it, or deposit it into a Stability Pool (a shared reserve that helps keep the system safe) to earn INDY rewards plus a share of ADA from closed vaults3.
- Three layers of peg defense. A price oracle (an on-chain feed of the ADA-to-dollar market price) tells the protocol what ADA is worth. Stability Pools step in to absorb any vault that runs short on backing. Anyone can redeem iUSD for ADA at the oracle price, which pulls the market price back up whenever iUSD slips below a dollar13.
- Start small with ten ADA. The lowest amount of ADA you can lock to mint iUSD is ten ADA. You choose how much iUSD to mint against it, as long as your backing stays well above the minimum required2.
- Audited by Tweag and MLabs. Tweag reviewed the smart contracts (the on-chain programs that enforce minting and liquidation rules) and reported that all fourteen findings were fixed before launch4. MLabs published a follow-up audit hosted on the Indigo documentation site5.
What to Expect
Most people meet iUSD in two places. The first is any Cardano wallet that holds native tokens, where iUSD shows up as a normal asset you can send or receive. The second is the Indigo Protocol app, where you open a vault (a collateralized debt position, the on-chain account that holds your ADA backing), deposit ADA, choose how much iUSD to mint, and later close the vault by paying the iUSD back along with interest in ADA.
More active holders often deposit into the iUSD Stability Pool. The pool earns INDY rewards and shares the ADA from vaults that get closed for running too low on backing (a process called liquidation)3. The trade-off is that some of the deposited iUSD is burned during those events, so the balance can shrink in return for ADA payouts.
If you only want a dollar-tracking token on Cardano, you can also buy iUSD on a Cardano DEX without ever opening a vault. The price tracks one dollar closely but is not guaranteed, since it depends on the on-chain mechanisms above and the depth of trading markets.
